OWNER OCCUPIED HARD MONEY
There are several different types of private money loans and one of them is Owner Occupied Hard Money, which you can obtain from only a few private money lenders in the country and Capella Mortgage is one of the few companies that offer “consumer purpose” loans.
(RATES AND DOWN PAYMENT DEPEND ON THE TYPE OF DEAL)
20% DOWN PAYMENT USUALLY* (DEPENDS ON THE DEAL)
- Interest rate is as of August 2019 ranges between 7% to 10.5% for a standard private money loan from a private investor. That would put the APR between 8.25% and 11.5%. APR is NOT the interest rate.
- The lower the “loan to value”, the lower your interest rate. Your “loan to value” or “LTV” is the amount of the loan divided by the value of the property.
- The fees are between 2% and 6% of the loan amount. Standard loan fees for “borrower paid” is around 3%. There is no such thing as “lender paid” loan fees in true private money, because that means the lender would be paying you to to do the loan, and private investors won’t do that. Additionally, It is now illegal for us to give you a discount, or preferential treatment, so that is why we use “rate charts” to determine your rate and fees.
- 5-year loans Amortizing Payment for Owner Occupants with minimum 5 year balloon – that is federal law. That means you will be making a payment that “amortizes”, meaning part of the monthly payment is being applied to interest, and part is being applied to principal. If you are trying to do a short term loan, like a “bridge loan”, then you must tell us that you want a bridge loan so we can price it appropriately. The payment for a bridge loan is allowed to be interest only, therefore, your payment is cheaper than a fully amortizing loan. However, you can only do a bridge loan IF you own another property and there is at lease
- Minimum loan amount cannot go below $30,000 as the fee would be too low and we would lose money. There is a lot of work in owner occupied “consumer purpose” loans, and most private money lenders will not do these types of loans.
We will want to see a few bank statements, W2’s, Tax Return’s, or pay stubs at a minimum. If you are self-employed, we will ask for something else, like 12 or 24 months of bank statements.
- Debt to Income Ratio cannot exceed 50% on ANY loan whether investment or owner occupied.
- Taxes, and Insurance must be impounded
- Must have steady employment, or retirement income, or steady income, or enough assets (called “asset depletion”) to pay back the loan. Call us, we’ll talk to you about it. 702-214-4700.
- Approximately 2 weeks to close for owner occupants due to Dodd-Frank, but emergency loans are granted an exception. I don’t know any hard money lender in the world that has the process and technology that we do, and that is why not only do we say that we can we close fast, but we actually do!
All borrowers must qualify for hard money loans. There is no such thing as “loans based on a property’s equity” anymore. Per the state of Nevada, we must prove your ability to make payments, without using the equity in the property, for every single loan type, including investment properties, and commercial properties.
HOW MUCH DOES IT COST?
We don’t charge additional fees, like processing fee, broker fee, underwriting fee, doc prep fee, but you do have to pay $225 for loan servicing set up fee to the Loan Servicer, and $30 to the investor for the wire fee. Some other lenders charge these fees (broker fee, underwriting fee, processing fee, doc prep fee, etc.) on top of the origination fee, but we don’t, and we give you a Loan Estimate, as well as, all of the other federally required disclosures.
- For Owner Occupants the fee ranges from $1500 for a $30k loan to 3 points, depending on the loan amount.
So, the answer to the question “how much will it cost?” depends on your down payment, your credit worthiness, the property, your exit strategy, your common sense, and your character. We want borrowers who know what they are doing, are skilled in their trade, have honor and plan on paying us back within the 5 years. A private money loan is not for everyone, so call us at 702-214-4700 and let us review your situation and give you a price.7